Taylor sees the return of private buyer

The group yesterday said it has entered 2010 with a "very strong" order book, up 28 per cent on a year ago, as improved trading conditions continue from last autumn.

Taylor Wimpey, the second-largest housebuilder by market value behind Persimmon, is the latest to report improved trading in recent weeks, albeit tempered by lack of mortgage availability and concerns over the economic outlook.

As they recover from one of the toughest periods in decades, housebuilders fear a General Election, rising unemployment and spending cuts could take the wind out of their sails.

"Market conditions in both the UK and North America during 2009 were better than those experienced during 2008, although they still remained challenging," said the group, adding it expects to report results in line with expectations.

"Current market conditions are stable, with supply remaining restricted and demand solid. However, the risks of further weakness in the wider economy and reduced mortgage availability remain."

In the UK, Taylor Wimpey sold a total 10,186 homes last year, down 23 per cent on 2008.

But the rate of private home sales rose to 83 per cent of these, compared to 79 per cent in 2008.

The private reservation rate for 2009 was 0.55 homes per outlet, per week. That was a 37.5 per cent increase on the 0.40 homes reservation rate seen a year earlier. Cancellations fell to about 19 per cent compared to 37.5 per cent the previous year.

The average selling price rose from 153,000 in the first half of 2009 to 160,000 over the full year, although remains some way off the 171,000 achieved in 2008. Private home sales also commanded higher values, with an average price of 171,000 over the full year compared to 163,000 for the first six months of 2009.

The housebuilder said it was operating from 310 sites by the end of 2009 compared to 333 a year earlier. Of these, 17 are in Yorkshire, although that had fallen from 24 sites reported last June. While the group continues to buy land, it is focusing on the south where the market is stronger.

Taylor Wimpey added forward orders from private buyers for this year are up 62 per cent at 3,048. Including affordable housing reservations, its order book is up 28 per cent on the end of 2008.

Barratt, Bovis and Bellway last week said trading had improved in recent months, but all were cautious on the outlook.

York-based Persimmon this month reported forward sales ahead 40 per cent, but also said it will maintain a cautious approach while economic uncertainty prevails. It surprised the market by revealing an expectation-busting fall in net debt to 270m, almost 1bn lower than its peak in 2007.

Taylor Wimpey said year end net debt was about 750m, down from 1.5bn a year earlier, helped by a 510m placing and cash generation.

In North America, the firm said it was encouraged by a period of stability, but declined to comment on a potential sale of its US housing operations. Thanks to "extremely good affordability" and tax credits for homebuyers in the US, the group said it was "optimistic with regard to future prospects".

Analysts said no news of a sale of US housing operations has hampered shares. "Net debt remains an issue," said analysts at Citi. "A North American disposal would remove any medium-term cash flow needs."

Analysts at Cazenove said: "The tone of the statement is cautiously optimistic while being prudently cautious particularly in relation to mortgage availability."

Back to rising house prices

Taylor Wimpey cited growing evidence of rising house prices, with its average UK selling price rising from 153,000 in the first half of 2009 to 160,000 over the full year

That was echoed by a survey from property website Rightmove, which showed house prices rose by 1.2 per cent during the first week of January.

The rise in asking prices during the early days of 2010 helped the average cost of a home on the market in England and Wales increase by 0.4 per cent during the five weeks to January 9 to 222,261.

Rightmove estimates the stock of homes for sale is currently at its lowest level this century.